Capital Group and KKR Launch Their First Two Public-Private Investment Solutions and Announce Plans to Expand Their Exclusive Strategic Partnership
- Subsequent strategies will include two public-private equity-oriented solutions, expected to launch in the U.S. in 2026
- Work is underway to extend access for individuals interested in private markets through vehicles such as model portfolios and target date funds
LOS ANGELES and NEW YORK, April 29, 2025 /PRNewswire/ -- Leading global investment firms Capital Group and KKR today launched two interval funds focused on credit strategies, Capital Group KKR Core Plus+ and Capital Group KKR Multi-Sector+. Since their strategic partnership was announced in May 2024, the organizations have been working together on opportunities to further broaden access to private market investment solutions and provide education for individual investors, financial advisors and institutional clients.
Capital Group and KKR are already working on additional strategies and expect to deliver two equity-focused strategies intended to address different client needs and offer access to additional private markets asset classes.
"These solutions demonstrate the power of our combined scale and experience. We believe what Capital Group and KKR can do together is unmatched — blending best-in-class public and private market exposures to deliver diversified and differentiated investment outcomes at a compelling fee. I think of these public-private solutions as the best of both worlds," said Capital Group President and CEO, Mike Gitlin.
The two new interval funds employ a thoughtful and deliberate approach, designed from the ground up to deliver blended public-private markets exposure with a risk, return and liquidity profile driven by input from financial advisors and a focus on investor needs and outcomes. Defining features include:
- Public credit and private credit exposures combined into a single, holistic solution: over time, and subject to market conditions, each fund will seek to allocate approximately 60% of net assets to public fixed income and 40% to private credit consisting of direct lending and asset-based finance investments.
- Improved liquidity relative to standalone alternatives: quarterly repurchase offers up to 10% of the fund's outstanding shares at net asset value (NAV). Most interval funds offer 5% quarterly liquidity1.
- Highly competitive total expense ratios2:
- Capital Group KKR Core Plus+ at 84 basis points
- Capital Group KKR Multi-Sector+ at 89 basis points
- Low investment minimum of $1,000 for all share classes.
Just getting started
"Together with Capital Group, we are aiming to unlock the benefits of private investments for the 95%3 of individual investors who have not historically been able to invest in the private markets. We have only scratched the surface of what we can offer investors as we look to expand our collaboration across additional asset classes, geographies and formats. We entered this partnership knowing that our firms are highly aligned with collaborative cultures and complementary strengths―the launch of these first two funds shows what's possible when our teams come together," said Joe Bae and Scott Nuttall, Co-CEOs of KKR.
"Expanding access to private markets is much more than two public-private credit solutions. A joint, cross-company project team is already working on public-private equity solutions. We're discussing how we can bring public-private model portfolio solutions to our clients," said Gitlin. "We believe there is a role for private market solutions in retirement, including target date strategies. We're working on the best way to bring public-private solutions to clients outside the U.S. And we're also seeing how Capital Group can work more closely with KKR to support their insurance business. Needless to say, there's a lot going on as we partner to build this category and best serve our clients," Gitlin added.
Investing in education
Bringing public-private solutions to a broader audience is a critical first step in expanding access to private markets, and Capital Group and KKR are intent on ensuring the solutions can be successfully integrated into client portfolios and form part of turnkey solutions.
"Our partnership extends beyond products to the power of financial advice. Capital maintains relationships with more than 200,000 financial advisors across the United States. We have an opportunity as a trusted partner to help advisors deliver this significant advancement in our industry to their clients. We've built a knowledge platform to aide with understanding the category and are providing the tools needed to build client-centric portfolios using these strategies," said Matt O'Connor, CEO of Capital Group's Client Group.
The firms have built a robust educational platform to help financial advisors understand how to utilize private markets in client portfolios, which includes:
- A modular, digital experience calibrated for financial advisors with varying levels of familiarity and experience with private markets.
- A variety of formats including articles, videos and data interactives so advisors can learn in a way that suits their needs.
- Actionable insights from portfolio managers, investment specialists and portfolio strategists across Capital Group and KKR.
- Access to Capital Group's portfolio construction desk for support with asset allocation and portfolio construction.
"The opportunity set for public-private solutions is untapped both globally and across asset classes," said Eric Mogelof, KKR's Global Head of Client Solutions. "Together, we are building a new public-private category for investors and the educational resources to equip advisors and individuals to learn more about private markets and the potential benefits of incorporating private assets into diversified portfolios. We are laser focused on serving the needs of investors, and we could not be more thrilled to take this next step in our partnership with Capital Group."
Capital Group manages more than $2.8 trillion in assets, while KKR manages more than $600 billion across private equity, real assets, insurance and credit.
1Source: Morningstar's Guide to Interval Funds; Exhibit 8 Redemption Frequencies and Percentages; Fund company filings data as of May 31, 2024.
2Total expense ratios indicated for the F3 share class of Capital Group KKR Core Plus+ and Capital Group KKR Multi-Sector+. Expense ratios are as of the fund's prospectus available at the time of publication and are estimated. The investment adviser is currently waiving/reimbursing a portion of other expenses. Net expense ratios reflect the waiver/reimbursement, without which they would have been higher. The waiver/reimbursement will be in effect through at least April 22, 2026. Please see the fund's most recent prospectus for details.
3Source: Capgemini Research Institute for Financial Services Analysis, 2024 and KKR analysis.
About Capital Group
Capital Group has been singularly focused on delivering superior results for long-term investors using high-conviction portfolios, rigorous research and individual accountability since 1931.
As of December 31, 2024, Capital Group manages more than $2.8 trillion in equity and fixed income assets for millions of individuals and institutional investors around the world. Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.
For more information, visit capitalgroup.com.
About KKR
KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR's insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR's investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE:KKR), please visit KKR's website at https://kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group's website at https://www.globalatlantic.com/
All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All company and product names mentioned are the property of their respective companies.
Capital Client Group, Inc.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
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Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
KKR Credit Advisors (US) LLC serves as the sub-adviser with respect to the management of the private credit assets for Capital Group KKR Core Plus+ and Capital Group KKR Multi-Sector+. Capital Group and KKR are not affiliated. The two firms maintain an exclusive partnership to manage and deliver public-private investment solutions to investors. The equity-focused solutions may come in different product structures and respective roles for the parties than the first two products.
The funds are interval funds that provide liquidity to shareholders through quarterly repurchase offers for up to 10% of their outstanding shares under normal circumstances. To the extent more than 10% of outstanding shares are tendered for repurchase, the redemption proceeds are distributed proportionately to redeeming investors ("proration"). Due to this repurchase limit, shareholders may be unable to liquidate all or a portion of their investment during a particular repurchase offer window. In addition, anticipating proration, some shareholders may request more shares to be repurchased than they actually wish, increasing the likelihood of proration. Shares are not listed on any stock exchange, and we do not expect a secondary market in the shares to develop. Due to these restrictions, investors should consider their investment in the funds to be subject to illiquidity risk.
Investment strategies are not guaranteed to meet their objectives and are subject to loss. Investing in the funds is not suitable for all investors. Investors should consult their investment professional before making an investment decision and evaluate their ability to invest for the long term. Because of the nature of the funds' investments, the results of the funds' operations may be volatile. Accordingly, investors should understand that past performance is not indicative of future results.
Bond investments may be worth more or less than the original cost when redeemed. High‐yield, lower‐rated securities involve greater risk than higher‐rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. The funds may invest in structured products, which generally entail risks associated with derivative instruments and bear risks of the underlying investments, index or reference obligation. These securities include asset-based finance securities, mortgage-related assets, and other asset-backed instruments, which may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market's perception of issuer creditworthiness; while generally supported by some form of government or private guarantee, there is no assurance that private guarantors will meet their obligations. While not directly correlated to changes in interest rates, the values of inflation-linked bonds generally fluctuate in response to changes in real interest rates and may experience greater losses than other debt securities with similar durations. The use of derivatives involves a variety of risks, which may be different from, or greater than, the risks associated with investing in traditional securities, such as stocks and bonds. For example, the funds may purchase and write call and put options on futures, giving the holder the right to assume a long (call) or short (put) position in a futures contract at a specified price. There is no assurance of a liquid market for any futures or futures options contract at any time. Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity, and price volatility. These risks may be heightened in connection with investments in developing countries.
The funds invest in private, illiquid credit securities, consisting primarily of loans and asset-backed finance securities. The funds may invest in or originate senior loans, which hold the most senior position in a business's capital structure. Some senior loans lack an active trading market and are subject to resale restrictions, leading to potential illiquidity. The funds may need to sell other investments or borrow to meet obligations. The funds may also invest in mezzanine debt, which is generally unsecured and subordinated, carrying higher credit and liquidity risk than investment-grade corporate obligations. Default rates for mezzanine debt have historically been higher than for investment-grade securities. Bank loans are often less liquid than other types of debt instruments and general market and financial conditions may affect the prepayment of bank loans, as such the prepayments cannot be predicted with accuracy.
Illiquid assets are more difficult to sell and may become impossible to sell in volatile market conditions. Reduced liquidity may have an adverse impact on the market price of such holdings, and the funds may be unable to sell such holdings when necessary to meet their liquidity needs or to try to limit losses, or may be forced to sell at a loss. Illiquid assets are also generally difficult to value because they rarely have readily available market conditions. Such securities require fair value pricing, which is based on subjective judgments and may differ materially from the value that would be realized if the security were to be sold.
The funds are non-diversified funds that have the ability to invest a larger percentage of assets in the securities of a smaller number of issuers than diversified funds. As a result, poor results by a single issuer could adversely affect fund results more than if the funds were invested in a larger number of issuers. The funds intend to declare daily dividends from net investment income and distribute the accrued dividends, which may fluctuate, to investors each month. Generally, dividends begin accruing on the day payment for shares is received by the funds. In the event the funds' distribution of net investment income exceeds their income and capital gains paid by the funds' underlying investments for tax purposes, a portion of such distribution may be classified as return of capital. The funds' current intention not to use borrowings other than for temporary and/or extraordinary purposes may result in a lower yield than they could otherwise achieve by using such strategies and may make it more difficult for the funds to achieve their investment objective, than if the funds used leverage on an ongoing basis. There can be no assurance that a change in market conditions or other factors will not result in a change in the funds' distribution rate at a future time.
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